ALEXANDRIA, Va. – The Omnibus Appropriations package passed by Congress just before it concluded this session was a mixed bag for NCUA, which got some additional funding it has been seeking but was denied again on two items members of the NCUA board have made a priority.
First, the good news for NCUA: Congress boosted the funds appropriated for the Community Development Revolving Loan Fund grants.
“I want to thank lawmakers for coming to an agreement to more than double the funds available for NCUA’s Community Development Revolving Loan Fund grants in fiscal year 2023 as part of the Omnibus Appropriations package,” said NCUA Chairman Todd Harper. “If these additional appropriations—now at $3.5 million—are approved in the days ahead, the NCUA will be able to make more grants and bigger grants to eligible low-income credit unions for efforts like advancing minority depository institutions mentoring and preservation, supporting increased access to affordable financial products and services in underserved areas, closing the racial wealth gap, and enhancing cybersecurity. That is very good news.”
The Bad News
The bad news for NCUA’s perspective is that an extension of authorities granted the Central Liquidity Facility (CLF) during the pandemic were not extended, nor was the agency granted authority to supervise third-party providers to credit unions, an authority it has sought for many years.
“…I am also frustrated with the failure of Congress to heed the NCUA board’s calls to reauthorize the enhancements to the Central Liquidity Facility agent-member provision that come at zero cost to the taxpayer,” said Harper. That failure to act will now trigger the loss of $10 billion--with a B--in emergency liquidity for the smallest credit unions just as we face growing economic uncertainty, a high interest rate environment, and rising liquidity concerns. When a liquidity crisis hits, it’s better to have a reliable shock absorber in place than it is to rely on a hope and prayer that the problem will somehow work itself out.
With a Capital ‘T’
“Likewise, Congress also chose to reject additional protections for our national economic security by failing to provide the NCUA with the legal authority—the exact same authority that other federal banking regulators have to examine service providers for their regulated institutions—to examine contracted service providers who perform vital functions that have nearly $2 trillion--with a T--lowing through their unregulated information technology systems and operating practices,” Harper continued.
“It’s long past time to close this growing regulatory blind spot for the roughly one-third of all Americans who have placed their trust and hard-earned savings in federally insured credit unions.”
Don’t Want to Say ‘I Told You So’
Despite all that, Harper said he is nevertheless “deeply committed” to enhancing the strength of the credit union system and advancing economic equity.
“I will therefore continue pressing Congress during my time on the NCUA board to care more about these vital requests for the NCUA and the credit union members we protect, and I certainly hope I will not be put into the position to say ‘I told you so’ in the coming years.”